YOUR COMPANY IS LOOKING FOR A BUSINESS CREDIT FACILITY!
ASSET BASED LENDING AND ASSET BASED FINANCING SOLUTIONS IN CANADA
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
An ABL Asset-Based Line of Credit for Canadian business is in some ways a solution to the ' entitlement ' that business owners and financial managers feel around the necessity to access commercial credit. In some ways, it's access to a ' kinder, gentler' method of getting approved for revolving credit to run your business. Let's explain.
ARE YOU FAMILIAR WITH ASSET BASED LENDING?
When we talk to clients about their needs and challenges around accessing business credit it's surprising to hear that many owners/managers have not even heard of ABL business loans/credit facilities. Why is that? Actually, one can be forgiven simply for the fact that the asset based loan is a newer method of financing in Canada that gains traction every day. These credit facilities grew popular in the United States and the solution has migrated into the Canadian business financing landscape.
HOW DOES YOUR FIRM OBTAIN APPROVAL FOR ABL FINANCING?
Approval for business financing revolves of course around a companies ' credit rating ‘, not dissimilar to that same rating that follows us around as consumers. That business credit rating revolves around quality of financials, ability to meet obligations to suppliers and lenders, character and capability of management, and, more specifically cash flow and profit generation.
WHEN THE BANK SAYS NO
But what happens if the new or challenged firm can't access the tremendous rates and flexibility offered by our Canadian chartered banks? Business still needs access to credit - enter stage left ‘ABL’ business lines of credit.
WHAT ARE ASSET BASED CREDIT LINES
Simply speaking they are revolving loans to businesses that are secured by A/R, inventories, and, uniquely, fixed assets. That's the ' big difference ' relative to a bank business credit line - simply that the focus is on the current and fixed asset collateral, not the unique emphasis that our banks place on ratios, covenants, and secondary sources of repayment such as outside personal collateral, etc.
BANK LENDING VERSUS ABL
Because Canadian banks, and rightly so we believe, are highly regulated they can't take the additional risk that is posed by ongoing management of receivables, inventory, fixed asset valuation, etc. That’s where the ABL facility excels, simply by the fact that if you have assets and revenues those ratios become almost meaningless.
SOME BANKS DO IN FACT OFFER ASSET BASED SOLUTIONS FOR BUSINESS CREDIT
While it’s a bit of an unadvertised secret that banks in Canada, or at least most of them, offer ABL facilities the reality is that more often than not they are not unlike traditional bank borrowing - but that's a subject for another day. One key point is that ABL bank lines from Chartered banks typically have a minimum borrowing of 5 Million dollars, which eliminated many business borrowers seeking SME COMMERCIAL FINANCING.
HOW IS THE BORROWING AMOUNT DETERMINED?
The asset-based credit line approval amounts fluctuate and are geared toward the constant growth and change in the sum of your A/R, inventory and fixed asset values. In almost all cases a strong assessment of these values will be made to ensure you've got maximum borrowing power. A ' borrowing base ' is established for assets such as accounts receivable and inventory, allowing you to drawn down on funds as needed on a day-to-day basis.
CONCLUSION
Asset based lenders are the ultimate working capital solution for your business capital needs. That borrowing base certificate can include company-owned real estate where there is an equity component, further adding to your borrowing ability! It is the power of financing the balance sheet.
If you want to be sure you have access to business credit and asset-based loans that otherwise might not be attained from Canadian banks seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in your borrowing needs.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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